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Judgment
PER MANISH AGARWAL, AM:
This appeal is filed by the assessee against the order of the Ld. Commissioner of Income Tax (Appeals)-29, New Delhi [CIT(A) in short] in Appeal No. CIT(A), Delhi-29/10165/2010-11 dated 27.01.2026 passed u/s 250 of the Income Tax Act, 1961 (the Act, in short) arising out of the assessment order dated 04.03.2024 passed u/s 153C of the Act for Assessment Year 2011-12.
The assessee has raised following grounds of appeal:
“1.That the Ld. Assessing Officer (herein referred to as 'Ld. AO') erred on facts and in law in completing assessment under section 153C of the Income Tax Act, 1961 (herein referred to as 'the Act') at an income of Rs. 1,59,52,410/-.
2.That the action of the Ld. AO in assuming jurisdiction to frame assessment u/s 153C is barred by limitation and consequently the re-assessment order in furtherance of invalid jurisdiction is invalid, arbitrary, unjust and bad in law.
3.That having regards to the facts and circumstances of the case, the CIT(A) erred in passing the ex-parte order without providing proper opportunity despite the fact that the appellant has properly sought adjournment before passing of the order which is against the principles of natural justice.
4.On the facts and circumstances of the case, the assumption of jurisdiction to frame assessment u/s 153C is barred by limitation as delay in recording of satisfaction note read with Circular No. 24/2015 dated 31.12.2015.
5.On the facts and circumstances of the case, the Ld AO has not Provided the copy of statements of the alleged witness of revenue despite of the fact that it is categorically demanded by the appellant, which violates the principle of natural justice
6.That the assessment is bad in law as the Ld. Assessing Officer relied only upon the statement of third person without providing appellant the opportunity to cross-examine the same.
7.That having regard to the facts and circumstances of the case, the Ld. AO has erred/failed to issue a valid Show Cause Notice to make the impugned addition, to the appellant before concluding the proceedings. Hence, the impugned assessment order is bad under the eyes of law.
8.That the Ld. CIT(A) has erred in upholding the addition of Rs. 1,50,00,000/-under the provisions of section 69A of the Act with respect to payment received on sale of computers to Alankit Assignments Ltd, without appreciating the facts and documents furnished during the assessment proceedings.
9.That the Ld. CIT(A) has erred in upholding the addition of Rs. 4,50,000/- (3% of 1,50,00,000/-) under the provisions ions of section 69C of the Act on arbitrary/baseless assumption that the appellant had paid commission for taking accommodation entry from Alankit Assignments Ltd without appreciating the facts and documents furnished during the assessment proceedings.
10.That having regard to the facts and circumstances of the case, the Ld. AO has erred in carrying out the re-assessment proceedings on basis of incorrect facts and bald information.
11.That the impugned order is arbitrary, illegal, bad in law and in violation of rudimentary principles of contemporary jurisprudence as the appellant participated in the proceedings and furnished necessary replies & documents and also relied upon numerous judicial pronouncements.
12.That having regard to the facts and circumstances of the case, the Ld. AO has erred in making the addition without considering the submissions and ample documents furnished during the course of re-assessment proceedings. 13. The Appellant craves leave to add, alter, amend or withdraw any ground or grounds of appeal at any time before or during the course of hearing of this appeal and prays that the appeal may be allowed.”
Though the appeal of the assessee was decided ex-parte by ld. CIT(A) however, before us, in Ground of appeal No. 2 and 4, the assessee has challenged the validity of the order passed u/s 153C of the Act on the ground of limitations. Since these are legal grounds and thus, the same are decided herein below:
Grounds of appeal No. 2 & 4 raised by the assessee are with respect to the initiation of proceeding u/s 153C of the Act thought the same was barred by limitation as the satisfaction note was recorded by the AO of the person searched before the initiation of proceedings in the case of the assessee on 24.06.2022 which falls in AY 2023-24.
Before us, Ld. AR for the assessee submits that in the instant case, the satisfaction was recorded by the AO of person searched on 24.06.2022 which falls in AY 2023-24 when the seized material pertaining to the assessee was handed over to the AO of the assessee i.e. the person other than the person searched. Ld. AR submits that for the purpose of initiating the proceedings u/s 153C of the Act, date of handing over of the material by the AO of person searched to the AO of other person should be taken as the “date of search” which in the instant case was 24.06.2022. Therefore, period of Six (06) assessment years for which the proceedings u/s 153C could be initiated, must be taken from AY 2022-23 and backward calculation is to be made which ends upto AY 2017-18. Thus, the notices u/s 153C could be issued from AY 2017-18 to AY 2022-23 and AY 2023-24 would be the search year. This being so, the year under appeal i.e. AY 2011-12, falls outside the period of 06 years and therefore, no proceedings could be initiated u/s 153C of the Act for these assessment years. The Ld. AR placed reliance on the judgment of Hon’ble Jurisdictional High Court in the case of PCIT v. Ojjus Medicare Pvt. Ltd. reported in (2024) 161 taxmann.com 160 and various other judgments of the Co-ordinate Bench of Tribunal in support of the case of the assessee towards exclusion of the year under appeal from the ambit of limitation period u/s 153C of the Act.
On the other hand, Ld. CIT DR for the Revenue vehemently supported the orders of the lower authorities and submits that period of limitation should be reckoned from the date of search and not from the date of satisfaction note. Alternatively, he submits that even if the date of satisfaction note in the case of assessee is taken as date of search, the enhanced the period as per 4th Proviso to section 153A(1) of the Act come into play and accordingly, the AO has rightly invoked the provisions of section 153C for both the Assessment years which are covered within the period of Ten years.
Heard the contentions of both parties at length and perused the material available on record. Before going further, the satisfaction note recorded by the AO of the assessee, i.e. the AO of person other than the person searched is reproduced herein below:-
The assessee has challenged the issue of legality of initiation of proceedings u/s 153C of the Act for the year under appeal on the ground that notice issued u/s 153C of the Act was after the limitation period. The claim of the assessee was that in the instant case satisfaction note was recorded by the AO of the person searched 24.06.2022 when the documents and other books of accounts seized from the possession of the person searched were handed over to the AO of the assessee being the other person and accordingly the same should be treated as the date of search for the purpose of limitation period of 06 years for initiating the proceedings u/s 153C of the Act. Therefore, what is relevant is that date of receipt of seized material or documents by the AO of non-searched persons i.e. assessee in the instant case. As observed above, the AO of the assessee i.e. non-searched person, has received the seized material on 24.06.2022 and thereafter recorded his satisfaction for initiation of proceedings u/s 153C of the Act in the case of assessee on 22.11.2022 which both dates are fallen in AY 2023-24, therefore, by respectfully following the judgement of hon’ble Supreme court in the case of Jasjit Singh reported in [2025] 173 taxmann.com 575 (SC) and of the hon’ble jurisdictional high court in the case of PCIT v. Ojjus Medicare Pvt. Ltd. (supra), wherein it is held that the date on which documents and other material was handed over by the AO of the person search to the AO of other person should be taken as the date of search for the purpose of section 153C of the Act. In the instant case it was 24.06.2022 and, therefore the period of 06 years has to be counted from AY 2023-24 and the 06 preceding AYs would be AY 2017-18 to AY 2022-23 and AY 2023-24 will be the year of search. This view is further affirmed recently by the jurisdictional high court in the case of PCIT Vs. Annex Infrarealty Pvt. Ltd. in ITA No. 386/2025 dt. 28.07.2026. Since the impugned assessment year before us is AY 2011-12, the same is barred by limitation and thus, no notice u/s 153C could be issued for the year under appeal.
Coming to the arguments of the Revenue that the impugned assessment year falls under the extended period of 10 years. As could be observed from the satisfaction note recorded, as reproduced herein above, the AO of the assessee has recorded his satisfaction for initiation of proceedings u/s 153C of the Act for 10 AYrs starting from AYs 2010-11 to AY 2020-21, and if the correct date of search i.e. 24.06.2022 is taken and from this date Ten assessment years are taken, the year under appeal falls outside the period of ten assessment years. Thus, even on this score, the claim of the Revenue that the impugned assessment years are covered under the extended period is devoid of any merits and accordingly, we hold that the notice issued u/s 153C of the Act is beyond the period of limitation and thus invalid notice and the consequent order passed is hereby quashed. Accordingly, Grounds of appeal No. 2&4 raised by the assessee are allowed.
Since we have already allowed Grounds of appeal No. 2 & raised by the assessee, the other Grounds of appeal became academic hence, not adjudicated.
In the result, appeal of the assessee is allowed.